Tight Float

Definition ∞ Tight float describes a market condition where a relatively small proportion of a digital asset’s total supply is actively available for trading. This scarcity of readily available tokens can result from a large portion being held by long-term investors, locked in staking protocols, or removed from circulation through burning mechanisms. A tight float can lead to heightened price volatility, as even modest buying or selling pressure can significantly impact market prices. It signifies limited liquidity in the open market.
Context ∞ The current market often observes tight floats for certain digital assets, particularly those with strong community holding or significant protocol utility that encourages locking tokens. Discussions frequently address how this limited tradable supply can amplify price movements during periods of increased demand. Future market behavior will largely depend on changes in this float, as more tokens entering or leaving circulation can alter price sensitivity.